333 Holcomb Ave., Ste. 300 Reno, Nevada 89502 775.850.3100 DicksonCG.com

2019 RENOTOM FENNELL, CCIM775.250.6600 CELL775.850.3117 OFFICEtfennell@dicksoncg.com

MARKET REPORT

TOM FENNELL, CCIMLic. # B.1001434775.250.6600 CELL775.850.3117 OFFICEtfennell@dicksoncg.com

Nevada License #S.170076thansen@dicksoncg.com775.624.3957 OFFICE

TRAVIS HANSEN, CCIM

DOMINIC BRUNETTI, CCIM License # S.58419775.850.3109 OFFICEdbrunetti@dicksoncg.com

SCOTT SHANKS, SIORPRINCIPALLicense # S.66593775.850.3102 OFFICE sshanks@dicksoncg.com

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NOTABLE NEW & EXPANDED

MAKITA POWER TOOLSDistribution

85 jobs

Reno ranked #1 for year over year growth and #1 for 5-year

growth as well as being named one of the 15 “Hottest” real estate markets for the next decade. Unemployment remains positive, EPIC Report Numbers surpass new projection, and Construction Index declines for the 10th straight month.

ULINE SHIPPING SUPPLIESDistribution

80 Jobs

RED DOT MANAGEMENTTech Ecosystem

40 Jobs

FIGURE TECHNOLOGIESTech Ecosystem

240 Jobs

MOBE HEALTH AND WELLNESSHealth, Medical Tech

300 Jobs

UPLIFT TRAVEL Tech Ecosystem

267 Jobs

1A AUTO PARTSLogistics, Distribution

150 Jobs

SUSTAINABLE FURNITURE INC.Manufacturing

80 Jobs

KTM INDUSTRIES, INC.Manufacturing

75 Jobs

MARATHON TRUCK BODYManufacturing

50 Jobs

OZARK MATERIALSManufacturing

50 Jobs

CHARLES RIVER LABORATORIESHealth, Medical Tech

38 Jobs

The latest graph for the EPIC 2.0 Study Area Actual Employment Tracking for December 2018 to August 2019 reports actual Job Growth and the New EPIC Scenario B Job Growth in the Study Area from December 18 to August 19 was 13,010 and 8,177 respectively reflecting 4,833 actual jobs in excess of the New EPIC Scenario B forecast. The actual jobs in excess of the New EPIC Scenario B forecast for December 18 to April 19 was 1,539, so the actual job growth in the 4 months since April 2019 has surpassed the New EPIC projection.

EPIC REPORT

The U.S. Bureau of Labor Statistics Unemployment Rate for the Reno area decreased from 3.2% in August 2019 to 2.7% in November 2019. The Reno Area unemployment rate continued to outpace the 3.3% United States nation rate, which reflected a similar 0.5% decrease from August 2019 to November 2019. The Reno area Professional and Business Services sector lead the Reno area employment growth rate with a 9.7% year over year increase in jobs from November 2018 to November 2019. The Reno area Construction sector was not far behind reporting a 9.1% year over year increase in jobs. The year over year increase in the job rate for both sectors fell when compared to August 2019.

RENO AREA

The December 2019 edition of the Job Flash prepared by RCG Economics, reported; “The Reno-Sparks MSA “headline” unemployment rate declined 0.2 points to 2.7% in November. Compared to November 2018, the region created 10,300 new private payroll jobs (103% of the total) and the unemployment rate fell 0.5 points. Year over year job growth peaked in December 2004 with 17,700 total jobs. Meanwhile, YOY average weekly inflation-adjusted wages declined 0.1% compared to November 2018. Reno-Sparks had the seventh-highest job growth in the nation. The Reno-Sparks economy continues to grow relatively quickly, as it has for the last few years. We expect to see similar growth in 2020.

ECONOMIC

Jason Hidalgo and the Reno Gazette-Journal published an article entitled “Housing, Reno named one of the 15 ‘hottest’ real estate markets for the next decade” on December 23, 2019. Included in the article Jason Hidalgo wrote; “Reno’s hot housing market is expected to continue sizzling in the coming decade, according to a new real estate ranking. Business Insider included The Biggest Little City in its list of the top 15 “hottest new places to live.” The ranking is based on feedback by real estate agents from across the U.S. who were asked to predict the most popular real estate markets for the next 10 years. Las Vegas also made the rankings, making Nevada the only state with two cities in the top 15. Although Business Insider did not rank the cities in a particular order, one real estate expert who took part was especially bullish on Reno. “In addition to Tesla moving to Reno, the area benefits from no state income tax, lower housing costs, an international airport, and proximity to Lake Tahoe,” said Chris Lim, founder of San Francisco-based firm Climb Real Estate. “Reno will surely be the hottest real estate market in the US for 2020 and beyond.”

HOUSING: ONE OF THE 15 ‘HOTTEST’ REAL ESTATE MARKETS

RANDY WALKER, CPA Lic. # BS.26921 / PM 126921775.850.3177 OFFICE775.813.0059 CELLrwalker@dicksoncg.com

SERIOUS CONCERN:The EDAWN CEO Updates dated January 11, 2020, reported “Housing remains a serious concern: The chart below shows that we are well off the goal for the number of permits for new housing units (including apartments and condos). As of October, we are almost 2,000 permits short of where we should be for the year and the lowest number in three years. Our housing is not keeping up with our growth. The shortage of new housing continues to drive our housing prices and rents up and is causing other challenges like an increase in homelessness.”

HOUSING

RANDY WALKER, CPA Lic. # BS.26921 / PM 126921775.850.3177 OFFICE775.813.0059 CELLrwalker@dicksoncg.com

Ekay Economic Consultants and the Center for Regional Studies created the Reno MSA Construction Index to provide a picture of the performance of the construction industry in the Reno MSA region. EKAY states “Reno MSA Construction Index declined between October and November 2019, the tenth month of decline in the index. The index shows a decline of 4.70% between October and November 2019. The index declined by 30.72% compared to the same month in the previous year (November 2018 and 2019). Construction employment in the region continues to grow. All commercial and residential permit series declined this month and compared to the same month last year. This continues a trend of declines in the level of building permits in the region, compared to high levels of growth in previous years.”

“It should be noted City of Reno building permit data has not been reported directly by the city since February 2019. These data were collected from the Accela database, but maybe not directly comparable to historical data due to potential differences in the data reporting methodology.”

CONSTRUCTION

Sources:EKAY/ Economic ConsultantsEugenia Larmore(775) 232-7203eugenia@ekay

UNR Center for Regional StudiesBrian Bonnenfant(775) 784-1771bonnen@unr.edu

Reno MSA Construction Index-November 2019Provides historical and current trends for the construction industry in the Reno MSA region.

The EDAWN CEO Updates dated January 11, 2020, reported; “We’re Number 1! Reno-Sparks ranks number one for year over year growth, number one for five-year growth, and third for economic strength out of 399 metros; according to Area Development – Site and Facility Planning Insider article, January 3, 2020. By the way, we were number 218 in 2014, so quite a change in just 5 years.”

The Area Development – Site Planning Insider article published January 3, 2020 explained; “The Reno-Sparks metro area (population: over 500,000) is no longer heavily focused on gaming and entertainment. Today, about 65 percent of Reno’s workforce is employed in the trade and services sector, and it’s total employment rate is more than triple the national average. Corporate citizens now include diverse players in healthcare, technology, and entrepreneurial startup businesses. A notable regional addition is Elon Musk’s Tesla Gigafactory 1, the world’s highest-volume battery plant, built just outside Reno. Meanwhile, New Deantronics is set to open a $40 million, 200-job medical device R&D and manufacturing campus in the Reno-Sparks area in 2020. Not surprisingly, the metro is now enjoying an expansion in distribution and warehousing facilities as well.”

NUMBER 1!

EMPLOYMENT GROWTH NEW POPULATION TRENDS

AVERAGE EMPLOYMENT & WEEKLY WAGESUNEMPLOYMENT RATE

As our developers continue to meet demand with new product, we are seeing new industrial developments in almost all markets including TRI, Fernley, Sparks, West Reno, North Valleys, and South Meadows.

In 2019, we saw roughly 3.3M sf new construction completions. Roughly 50% of these completions were speculative and 50% were build-to-suit.

SALES

Industrial sales in 2019 posted a record for any asset class, post recession with over $1billion in sale volume (including the Blackstone / GLP entity sale). Industrial is now the darling of the investment market and should remain that way.

There were a total of 7 sales over $50,000,000 with 1 sale being $157,000,000 in Northern Nevada, which was part of a multi-billion dollar portfolio acquisition. Of those 7 sales over $50,000,000, none were local developers or investors. Blackstone, Black Creek (2), Exeter, Stockbridge, Uline & Seagate accounted for these 7 sales which are companies ranging from Pennsylvania (Exeter) to San Francisco (Stockbridge).

NEW

LEASING

INDUSTRIAL PROPERTY

2018

2019

2,721,609 SF3,347,166 SF

FROM LAST YEAR

-9.88%

SALES VOLUME $689,859,664

FROM LAST YEAR

+116.48%

# OF TRANSACTIONS 73

Gross AbsorptionGROSS NET

2019 QUARTERLY

INDUSTRIAL

VACANCY YEAR OVER YEARVACANCY

Square Feet Square Feet

4.69%

7.02%

5.94%5.07% 4.69%

INDUSTRIAL NOTABLE LEASES

FRACHT FWO INC.1402 S. McCarran Blvd

785,953 SF Q4

1

CASE NEW HOLLAND1600 Newlands Dr

266,000 sf Q4

PATAGONIA365 Cabela & 385 Cabela Dr

143,000 & 104,000 sf Q1

GROVE COLLABORATIVE1190 Trademark Ave

198,000 sfQ2

SYMBIA775 Waltham Way

180,000 sfQ2

IAL1402 S McCarran Blvd

165,000 sfQ2

1A AUTO INC.9175 Moya Blvd

149,196 sfQ3

TIRE RACK3300 Waltham Way

143,520 sfQ3

L.A. T SPORTSWEAR2070 Brierley Way

110,000 sfQ1

GEODIS LOGISTICS475 Lillard Way

106,720 sf Q4

2 3 4 5

6 7 8 9 10

INDUSTRIAL TOP 10 SALES

SALESYEAR OVER YEAR

FROM LAST YEAR

-9.88%

TRANSACTION VOLUME $689,859,664

FROM LAST YEAR

+116.48%

# OF TRANSACTIONS 73

PROJECT SIZE SALE PRICE BUYER

GLP Reno/Sparks Portfolio 10,130,000 SF Entity Sale Link Industrial Properties

Greg St, S McCarran Blvd, Maestro Dr. 1,844,498 SF $157,800,000 Link Industrial Properties

Westcore Portfolio 1,125,269 SF $79,946,284 Stockbridge Capital Group

LogistiCenter I-80 West 792,547 SF $72,322,250 Black Creek Group

Petsmart Distribution Center 827,710 SF $54,000,000 Exeter Property Group

LogistiCenter 395 North Valleys 626,960 SF $53,900,000 Black Creek Group

South Sparks Industrial Park 584,866 SF $50,150,000 Seagate Properties

VOLUMEYEAR OVER YEAR

# OF TRANSACTIONS94

FROM LAST YEAR

-16.8%

TRANSACTION VOLUME $184,373,622.00

FROM LAST YEAR

-20.33%

LEASING

The state of the Northern Nevada office leasing market is still healthy.

We continued to head in a positive direction, with year-end vacancy falling to 9.93%; a reduction from 10.56% the year before. We finished the year with 3 straight quarters of positive net absorption and rental rates are continuing to climb. Top of market deals for brand new Class-A space are coming in above $3 per square foot, per month, a nice sign for landlords and developers. Also, we are seeing rates for second generation space continuing to bump up as vacancy drops and TI’s become more expensive.

This year we’ll see the completion of Rancharrah by Tolles Development Group and progress on two new proposed projects in Downtown and Meadowood, including McKenzie Properties 180,000 square foot Skypoint project at Virginia and McCarran.

There is a shortage of larger (15,000 sq.ft. + ) Class A space in the market, and although many of the lease transactions in the office market continue to be local companies, this new product will prove critical in attracting higher wage, white collar jobs and companies to the region.

OFFICE

Overall, office sales dropped compared to 2018. 2019 sales volume decreased by 20.33% and the number of transactions dropped from 113 to 94, a 16.8% decline. Although those two stats declined, the price per square foot rose to $242.83 and the average volume per quarter in 2019 was just over $46 million. Historically speaking, this is still strong compared to prior years with the exception of 2018 being a banner year for sales.

Investment demand continues to significantly outweigh the quantity of quality products. Average cap rates in 2019 were 5.94% for properties under 10,000 square feet and 6.59% for buildings larger than 10,000 square feet.

Despite a small drop YOY, we are still seeing investor demand and belief in the market to acquire larger, older age class buildings with renovation and re-tenanting in mind. The cost of ground up construction continues to help this strategy, and now just finding the available deals is the challenge! Occupied and stabilized buildings continue to perform well, with a large number of exchange buyers from western states, specifically California, looking to get out of higher taxed states into Nevada.

SALES

Average Cap Rate

OVER 10K SF

6.59% Average Cap Rate

UNDER 10K SF

5.94% AVERAGE P/SF $242.83

FROM LAST YEAR

+15.1%

OFFICE

$(Millions of dollars)

$(p/sf)

VOLUME

VOLUMEYEAR OVER YEAR

SALES YEAR OVER YEAR

SALES P/SF

YEAR OVER YEAR P/SF

QUARTERLY

OFFICE

VACANCY

Overall Vacancy Rate

Downtown

South Meadows

Meadowood

Central

Airport

9.93%

11.40%

3.60%

7.70%

17.58%

13.10%

Square Feet Square Feet

GROSS NET

TOP 200 OFFICE BUILDING DCG

9.93%

DIRECT VACANCY

Office sales rebounded in November with several notable sales. The largest transaction included five parcels of professional office condos with a total of 29,264 square feet at 5901-5975 Los Altos Pkwy in Sparks, which traded for $9,200,000 ($314 p/sf) in an off-market transaction to a California 1031 exchange buyer. The buildings were a mix of professional and medical tenants and were 100% leased at the time of sale. The reported cap rate was 6.6%.In South Meadows, Jensen Precast purchased the 25,108-square foot building at 9895 Double R Boulevard for $3,440,000 ($137 p/sf). The company plans to relocate their corporate offices from Steneri Way in Sparks to the building. DCG represented Jensen in the acquisition. Also in South Meadows, 500 Damonte Ranch Pkwy Bldg #700, which was 100% occupied with 12,260 square feet, traded for $3,600,000 with a reported 6.4% cap rate.In other sales, 1101 W Moana, a multi-tenant medical office with 11,036 square feet, sold for$2,050,000 ($170.83 p/sf) with a reported cap rate of 6.10%. In Downtown, local non-profit Eddy House purchased the 16,335-square foot building at 888 Willow Street for $1,500,000 ($91.83 p/sf).In the Meadowood Submarket, a 7,398-square foot, multi-tenant office building at 675 Sierra Rose traded for $1,380,000 ($187 p/sf).

The Office sector had several notable sales in December. The Meadowood submarket dominated office sales with the largest transaction occurring at 1575 Delucchi Lane. The Meadowood Crown Plaza with 78,240 square feet, comprised of 35 executive suites and 32 office spaces was 93%leased at time of sale, and traded for $7,300,000 ($93 p/sf) with a cap rate of 7.06% on reported NOI. In other Meadowood submarket sales, a 15,564-square foot, Class A office building at 6160 Plumas Street near McCarran Blvd and Lakeside Drive with tenants Alpine Insurance and R& R Partners was purchased for $3,500,000 ($225 p/sf) with a 6.35% cap rate; a 12,815- square foot building at 3700 Barron Way sold for $2,750,000 to the building tenant.($215 p/sf); a 6,151-square foot, 83%leased garden office building at 855 Maestro Drive was acquired for $1,450,000 ($236 p/sf) with a 6.6% cap rate; and a 5,832-square foot office at 180 Country Estates Circle traded for $1,280,000 ($219 p/sf) to an owner user represented by DCG.In Sparks, DCG represented the seller of an 8,760-square feet dental office space at 735 Sparks Blvd. The sales price of $4,000,000 with 6.0% cap rate included a 10-year, NNN leaseback.In the South Meadows submarket, 10381 Double R Blvd with 7,900 square feet and fully leased through 2024 was acquired for $3,200,000 ($405 p/sf).

OFFICE

Tenant SF Address/Submarket

Unitek 13,696 5250 S. Virginia St, Meadowood

McDonald Carano 29,385 100 W Liberty, 10th & 11th Floor, Downtown (renewal)

Eldorado Resorts 16,742 100 W Liberty 12th Floor, Downtown (renewal/expansion)

Ticor Title 13,242 5441 Kietzke Lane, Meadowood (renewal)

Dianda Construction 15,346 825 Steneri, Sparks

Charles Schwab 10,129 5301 Kietzke, Meadowood

Microsoft 47,860 6840 Sierra Center Parkway, South Meadows (renewal)

Trinet 52,998 9805 Double R, South Meadows (renewal/expansion)

Fennemore Craig 12,000 The Village at Rancharrah, Meadowood

ITS Logistics 17,744 50 W. Liberty St, Downtown

Figure Technologies 12,471 100 W. Liberty, Downtown

NOTABLE LEASES

OFFICE

Address & SF Price P/SF Notes

The Village at Lakeridge 6990 S McCarran Blvd. (71,678 SF) $17,900,000 ($250 p/sf) Year 1 cap rate of 6.2% was 100% occupied at time of sale.

5250 S Virginia St. (85,510 SF) $23,000,000 ($269 p/sf) McKenzie Properties was buyer, office building with 5.5 acres of vacant land (mixed-use project proposed)

Davita Analysis Center 777 Vista Blvd. (10,429 SF) $6,508,000 ($625 p/sf) 100% occupied by Davita, reported cap rate was 5.00% at time of sale.

5580 Kietzke Ln. (14,670 SF) $4,450,000 (303 p/sf) 100% occupied by Carrington College, 7.2% cap rate on 2020 NOI.

Virginia Lake Crossing 2195 S Virginia St. (25,517 SF) $4,050,000 ($159 p/sf) Buyer will renovate building, first floor was fully leased at time of sale.

10455 Double R, 10645 Double R, 475 Sommerset (17,065 SF) $7,800,000 ($457 p/sf) Three dental offices with 10-year leases in place. Tenants: My Kid's Smile, Legendary Smiles & Sierra Oral and Facial Surgery. Cap rate of 5.66%.

100 N Sierra St. (55,626 SF) $5,700,000 ($102 p/sf) Property was 60% occupied at time of sale. Tenants were Liberty Food and Wine Exchange & Fitness for $10.

E Plumb Ln. & Casazza Dr. (86,471 SF) $8,250,000 ($95.41 p/sf) Building was 100% vacant at time of sale. Sale includes 1.06 acre vacant lot.

5301 Kietzke Ln. (20,259 SF) $11,667,798 ($595.93 p/sf) Charles Schwab occupied 50% of the Class A office building at time of sale.

100 Washington St. (18,037 SF) $3,300,000 ($182.96 p/sf) Renovated in 2017, property had a reported cap rate of 7.03% of sale. It is 100% leased to multiple tenants.

TOP 10 SALES

RETAIL

INVESTMENT

Despite a big shake-up in the retail market nationally, our retail market in Reno/Sparks stayed relatively consistent with respect to investment volume.

Sales numbers in 2019 remained consistent with 69 sales, which is the same number as 2018, but the volume dropped to $192,620,009 as compared to 2018 with a total volume of $226,176,109.

Average price per square foot did increase in 2019 to just over $279, up from $266 p/sf in 2018.

Quarter 2 and Quarter 4 were very strong, carrying over 73% of the total volume for the year. Q4 was by far the strongest quarter with $87,140,000 in total volume equating to 45% of the 2019 total. This is in large part due to the Sparks Galleria selling in October for $40,650,000.

On the leasing front, retail remained relatively stable. The vacancy rate dropped about 1% to 6.1% overall, and there are a number of new projects including Rancharrah, Keystone Commons, and Reno Public market that are bringing in new space including grocery, food and beverage, and food hall concepts to Reno’s Core. The cost of construction for ground up construction and for tenant improvements continue to push lease rates higher.

LEASING

VOLUME SALES YEAR OVER YEAR

P/SFYEAR OVER YEAR YEAR OVER YEAR

Year over Year Vacancy

7%

The final quarter of 2019 was steady, as predicted. The largest leasing transaction this quarter was for the SPCA. They leased 18,347 SF at 75 East Moana Lane, previously occupied by Nevada Backyard. This was the only retail lease transaction this quarter, in Reno, over 10,000 SF.

2019 had a total of five retail lease transactions over 15,000 SF. There are more than 20 retail spaces, over 15,000 SF, currently on the market available for lease. We had several larger tenants close a larger retail location this year. Best Buy closed at The Legends at Sparks Marina. Goodwill relocated from The Crossing at Meadowood Square to Smithridge Center (previous Toys R Us). The Virginia Street Antique Mall closed its doors this year, vacating 17,600 SF in Midtown.

The largest retail lease transaction of 2019 was for Action Home Appliance, leasing 25,128 SF in the 3rd quarter. They joined Ross, Planet Fitness, and many more with the Silver State Plaza Shopping Center at 500 N. McCarran Blvd., Sparks, NV 89431.

Q4 2019

Overall Vacancy Rate 6.1%

Neighborhood Center Vacancy 7.7%

Power Center Vacancy 6.0%

Strip Center 4.7%

General Retail Vacancy: 4.4%

Free Standing

Net Absorption 36,900 SF

NOTABLE SALES RETAIL

Address & SF Price P/SF Notes

Sparks Galleria (210,429 SF) $40,650,000 ($198 p/sf)

The center was 88.6% leased at the time of sale. The property is anchored by Sprouts Farmers Market and Marshall/Home Goods. The Net Operating Income was reported to be $2,771,881 based on underwriting figures as of August 31,

2019, yielding a cap rate of 6.81%.

University Village Shopping Center (39,184 SF) $7,600,000 ($194 p/sf)University Village Shopping Center. Value add. Currently 97% occupancy.

9.25% cap rate.

2300-2360 Oddie Blvd. (81,247 SF) $5,900,000 ($73 p/sf) 8.55% cap rate - Evergreen Plaza Anchor tenants include Savers & CVS

7111 S Virginia St. (50,708 SF) $5,200,000 ($103 p/sf)

Sierra Meadows Plaza - 4 retail buildings. 65% occupied at time of sale. REO sale with plans for renovations over the next year and a half. Tenants include Bistro 7, All Creatures Vet Care, Reno Family Physicians, Miracle Ear, Corbin

Chiropractice, and LabCorp.

SHOPPING

TRANSACTION VOLUME $192,620,009

FROM LAST YEAR

14.8%FROM LAST YEAR

0%

AVERAGE P/SF $279.27

FROM LAST YEAR

5%

# OF TRANSACTIONS69

RETAIL

Address & SF Price P/SF Notes

530-538 W Plumb Ln. (14,327 SF)

$3,500,000 ($244 p/sf)

DCG rep'd buyer - Plumgate Shopping Center - 7.01% cap

10855 Double R Blvd. (9,980 SF)

$3,100,000 ($311 p/sf)

6.51% cap rate.Tenants include Goodwill Industries, Little Caesars, Town Liquor & Smoke, Haven on Earth Bread & Bakery, Ace Cleaners,

Hutch's Quik Smog, and Best in Class Education Center

1155 W 4th St. (64,236 SF)

$5,000,000 (77.84 p/sf)

The center was 83.8% leased at sale and sold for a reported cap rate of 6.5%. Mix of Office on the 2nd floor and ground floor Retail. Class C building on 3.47 acres. Tenants include: Pizza Baron, Absolute Dental,

H&R Block, etc

188 California (7,000 SF)

$1,925,000 ($275 p/sf)

fully leased 7,000-square foot building. 6.25% reported cap rate. Tenants include Monaciello restaurant, The Loving Cup, a salon and

yoga studio (second story)

1085 S Virginia St. (7,707 SF)$1,500,000

(194.63 p/sf)Main tenant Blum Medical Dispensary - The NOI was reported to be

$120,000 yielding an 8% cap rate.

NEIGHBORHOOD

STNL

Address & SF Price P/SF Notes

6407 S VIRGINIA ST (31,300 SF)$4,475,000 ($143 p/sf)

Investment sale. Single tenant, Goodwill. Over 5 years left on term.

470 N McCarran Blvd. (3,030 SF)$3,850,000

($1,271 p/sf)Tenant Raising Cane's in the Silver State Plaza. $195,000 NOI 5.06%

cap rate.

10590 N McCarran Blvd. (2,700 SF)$2,500,000 ($926 p/sf)

Investment sale. Check City is single tenant. New 5 yr lease. Cap rate 5.28% on $132,000 NOI. Permitted drive-thru.

NOTABLE SALES

MULTIFAMILY

In 2019 we saw a decrease in both deal volume and number of transactions. The number of transactions was down over 30% and deal volume was down 11% in 2019. Alternatively, pricing was over 20% year over year, showing continued strength in underwriting and rent growth.

Cap rates continue to hover in the 5% range, with many regional and national buyers moving capital into the market from larger markets.

SALES

Apartment demand remains very strong with limited inventory, although we are seeing the vacancy rate rise as larger projects were completed through the second half of 2019. As of Q4 2019, we still have 4,867 units under construction, with 4,712 in planning phases. Vacancy went up to almost 4%, from a annual low of 2.6% in Q2 2019. Average rents actually decreased $21 per month to $1,324 to end the year.

RENT

AVERAGE APARTMENT

VACANCY

3.96%Q4’19 Reno Multifamily Average Vacancy

$1,324Q4’19 Reno Multifamily Average Rental Rate

*DATA PROVIDED BY JOHNSON PERKINS GRIFFIN APARTMENT SURVEY

MULTIFAMILY

Total units planned or under construction actually decreased slightly to 9,579 units at the end of 2019. Developable land prices and cost of construction continue to be the most influential factors hindering new multifamily development. There are a total of 4,876 units currently under construction, with the remainder in planning phases. Job growth continues to be high, and much of the growth continues to need apartments versus single family homes, as that is what they can afford.

NEW

UNDER

PLANNED TRANSACTION VOLUME $444,667,367

FROM LAST YEAR

11%

# OF TRANSACTIONS 50

FROM LAST YEAR

38%

AVERAGE P/UNIT $130,294.70

FROM LAST YEAR

21%Overall Vacancy Rate

3.93%

4,867Total Multifamily Units Under Construction

*DATA PROVIDED BY JOHNSON PERKINS GRIFFIN APARTMENT SURVEY 4,712Total Multifamily Units

In Planning

Address Sales Price Units $/Door Submarket Year Built Notes

Waterstone at Kiley Ranch - 815 Kiley Pkwy. $55,900,000 302 $185,099.34 Sparks 20071 and 2 bedroom

apartments

Caviata at Kiley Ranch - 950 Henry Orr Pkwy. $51,700,000 184 $280,978.26 Sparks 20064.97% cap rate, class A

complex was 95% occupied at time of sale

Skyline Canyon - 3300 Skyline Blvd. $37,550,000 204 $184,068.63 Central 1973 5.25% cap rate.

Southwest Village Apartments - 3295 S. Virginia St.

$35,350,000 332 $106,475.90 Virginia Lake 19725.45% Cap rate, 95%

occupied at time of sale

Regent Care Center - 555 Hammill Ln. $13,600,000 122 $111,475.41 Meadowood 1998 Convalescent Hospital

Advanced Health Care - 961 Kuenzli St. $11,850,481 42 $282,154.31 Downtown 2016 Convalescent Hospital

Towers at Pink Hill - 1349-1385 N Virginia St. $9,350,000 23 $406,521.74 Downtown 2017 6.25% cap rate.

Banbridge Apartments - 1000 El Rancho Dr. $8,950,000 128 $69,921.88 North Reno 1989 Low income housing

444 Kirman Ave. $8,300,000 84 $98,809.52 North Reno 1977 No cap rate reported. 99% occupied at time of sale.

La Casa Arms - 500 Linden St. $5,750,000 69 $83,333.33 North Reno 1972 No cap rate reported. 88% occupied at time of sale.

NOTABLE SALES MULTIFAMILY

VOLUME SALES YEAR OVER YEAR YEAR OVER YEAR

P/UNITYEAR OVER YEAR

LANDOVERVIEW

Land sales continued to have another strong year in 2019, this past year not slowing at all for large-scale acquisitions. Despite the labor shortage and low unemployment, we continue to see developers and capital believe in growth for all asset classes in the region.Similar to prior years, multifamily (market rate, student, and senior) housing and industrial led the way, as those speculative markets are the hottest, with office and retail following behind. We are seeing rents continue to increase, but also our available workforce has been reduced with the economic recovery. We’ve gone from 14.2% unemployment in 2011 to 2.7% unemployment at the end of 2019, making available labor scarce and, subsequently, projects have been taking longer than expected. Our market is still less costly and has much easier entry to build in comparison to neighboring states, but we will need to have a continued focus on workforce attraction to meet the growing demand.

With our industrial market experiencing historically low vacancy, and a large amount of distribution, e-commerce, and manufacturing companies choosing to consider the region, we’ve seen continued demand by local and national developers for suitable industrial land. The Reno/Sparks submarket has limited availability of larger industrial parcels, forcing land prices higher and developers to other markets like Fernley and TRI.

INDUSTRIAL

Land Type Submarket Sales Price Acreage Price/SF Notes

447 Ingenuity Ave. Sparks $4,774,916 39.53 $2.77 Industrial land sale to Avenue 55, developer from Seattle, Washington

Echo Ave. & Military Rd. North Valleys $3,900,000 46.58 $1.92 Buyer was Makita USA Inc. our of La Mirada, California

Lincoln Hwy., State Route 427 Lyon County $45,000,000 4100 $0.25 Mark IV Capital acquired approximately 4100 acres in Fernley.

505 USA Pkwy N Outlying Washoe County $1,600,000 24.49 $1.50 Located in Tahoe Regional Industrial Center,

no approved plans for development

Echo Ave. North Valleys $2,058,210 37.8 $1.27 Purchased by developer out of Indiana, Becknell Industrial

Corporate Blvd. Central/Airport $1,359,072 3.12 $10.00 Proposed Industrial land, no construction dates have been determined.

Echo Ave / Mt. Limbo North Valleys $1,250,000 12.48 $2.30 Buyer was Prologis

Western Rd. North Valleys 1,270,000 7.48 $3.90 Local buyer was Ryno Land & Dev LLC

We saw a few speculative office land acquisitions in 2018, but as a whole, rents versus construction costs are still a challenge for new office product. Most office land acquisitions in 2018 were on the smaller side.

COMMERCIAL

Land Type Submarket Sales Price Acreage Price/SF NotesDouble R Blvd. Meadowood 16,708,928 17.28 $22.2 Buyer was Sparks Family Hospital

Island Ave. & Court St. Downtown 11,282,000 1.484 $174.56 55,000 SF Office buildIng proposed, new restaurants, MF, Hotel, etc.

Talbott Ln. Meadowood 11,000,000 14.78 $17.09 Rancharrah Holdings to Toll South

Clean Water Way Central/Airport 18,000,000 104 $3.97 Buyer was Reno Land, purchased farmland from UNR

Wingfield Hills Sparks 9,402,021 25.38 $8.5 Kiley Ranch Business Park

Our market continued to see strong fundamentals for new apartment construction. We have almost 4,000 units under construction and another 6,000 units currently planned in the region. With a vacancy rate around 3% and double-digit rent growth the prior two years, apartment land was in high demand in 2018.

MULTIFAMILY & SENIOR

Land Type Submarket Sales Price Acreage Price/SF Notes

Boomtown Garson Rd West Reno $2,235,000 10.71 $4.79 Local Buyer, over looks Truckee River, just off of I-80

755-765 S Meadows South Meadows $2,400,000 5.17 $10.66 Mountain Lake Estates - 120 units under construction

661 Lake St Downtown $9,100,000 2.95 $75 Plans for a 416 unit, Class A student housing development

4275 W 4th St W. RenoDowntown $4,750,000 8.13 $13.40 Ensemble Real Estate Solutions was buyer

- Proposed use is 182 unit MF complex

Propel Dr & Century Way Central/Airport $3,219,126 6.986 $10.58 Lyon Living out of Newport Beach, CA purchased from REno Land

LAND

Our subdivision land market has exceeded pricing from the last peak. We are still only pulling about half of the annual permits from the early 2000’s, and sales of new inventory have remained consistent for the past 4 years.

SUBDIVISION & RESIDENTIAL

Address Submarket Sales Price Acreage Price/SF Notes

Rancharrah Meadowood 10,560,000 7.826 $30.98 Buyer was Toll Brothers

Stonebrook Pkwy. Sparks 11,687,000 42.71 $6.28 Buyer was Toll Brothers

Rusty Owl Dr. Sparks 3,826,651 1.17 $74.89 Buyer was DR Horton

N Center & N Virginia St Downtown 4,400,000 1.94 $52.2 Buyer was Compass Point Holdings LLC

Oppio Ranch, La Posada Sparks 11,691,488 249.26 $1.72 Buyer was Regent Properties

333 Holcomb Ave., Ste. 300 Reno, Nevada 89502 775.850.3100 DicksonCG.com

MARKET REPORTTOM FENNELL, CCIMLic. # B.1001434775.250.6600 CELL775.850.3117 OFFICEtfennell@dicksoncg.com